Appeal from Judgment of the Court of Common Pleas, Civil Division, of Lackawanna County, No. 75 March Term, 1979.
David E. Heisler, Scranton, for appellant.
John T. McLane, Jr., Scranton, for appellees.
Cirillo, President Judge, and Wieand and Olszewski, JJ.
[ 359 Pa. Super. Page 159]
When the owner of a property in Lackawanna County purchased insurance under the Pennsylvania Fair Plan Act,*fn1 he caused his daughter to be listed as the named insured. In an action by father and daughter to recover indemnity for a fire loss, the insurer defended on the grounds that it had no contract with the father and that it was not required to pay the proceeds to the daughter because she had no insurable interest in the building and contents which had been destroyed by the fire. The claimants contended, however, that the broker who had placed the coverage had known fully the circumstances and, because he had been the agent of the insurer, the insurer should be estopped to assert such defenses. The case was submitted to the jury to determine the agency of the broker. The jury was not
[ 359 Pa. Super. Page 160]
otherwise asked to determine, nor did the trial court determine as a matter of law, the validity of the insurer's defenses. Following a verdict in favor of the claimants and a denial of the insurer's post-trial motions, the insurer appealed from the judgment entered on the verdict.
Paul Stallo was the owner of a pizza business. He conducted his business in a building which he leased from William and Marjorie Gilbert in Chinchilla, Lackawanna County.*fn2 In January, 1963, Stallo entered a long term agreement to buy the premises from the Gilberts. In the written agreement, however, Stallo was not named as buyer; instead, he caused the name of his nephew, Carl Neiper, to be inserted as the buyer. To protect Stallo, his attorney took and held in escrow a signed deed in which the name of the grantee had been left blank. From January, 1963, to April, 1973, the sellers paid the taxes and the costs of keeping the building insured. They were reimbursed for these amounts by Stallo, who simply added the taxes and costs of insurance to the monthly payments of principal and interest required by the agreement. Early in 1973, the insurance on the building was cancelled. Stallo then requested the purchase of other insurance from the Ferrario Insurance Agency, which, in turn, applied for coverage with the Insurance Placement Facility of Pennsylvania, hereinafter sometimes referred to as the "Fair Plan." Named as insureds in the application were the Gilberts and Paula Stallo, the daughter of Paul Stallo. The "Fair Plan" agreed to provide coverage, and a policy was issued as requested. In the fall of 1973, Stallo also purchased from Fair Plan a policy of insurance to cover the contents of the building. Named as insured in this policy was Paula Stallo. On February 16, 1978, while the foregoing policies of insurance were in effect, the building and its contents were destroyed by fire. When Stallo submitted a claim to Fair Plan,*fn3 the claim was denied because he was not an insured and because
[ 359 Pa. Super. Page 161]
his daughter, who was the named insured, did not have an insurable interest in the building or its contents.
In an action filed by Paul Stallo, Paula Stallo and Carl Neiper, the claimants contended that Fair Plan was estopped to deny liability to Paul Stallo because it knew that he was the real party in interest. The insurer had this knowledge, it was contended, because the relationship between Stallo and his daughter had been fully explained to Frank McManamon, an employee of the Ferrario Insurance Agency. The Ferrario Agency, it was contended, had been the agent of Fair Plan; and, therefore, McManamon's knowledge was to be imputed to the insurance company.
The Pennsylvania Fair Plan Act of July 31, 1968, P.L. 738, No. 233, 40 P.S. § 1600.101 et seq., was enacted to make insurance coverage available to protect property for which basic property insurance was not available through the normal insurance market. It was also intended to create a reinsurance arrangement whereby the responsibility for insuring such properties would be shared by all insurance companies doing business in the Commonwealth. See: Pennsylvania Fair Plan Act, supra, § 102, 40 P.S. § 1600.102. The plan was to be administered by an Industry Placement Facility according to the terms of the statute and also according to rules and regulations adopted by the Insurance Commissioner. If a property were insurable and the insured did not owe premiums on prior policies, the Placement Facility could require the issuance of a policy of basic property ...